We bought a new – to us – car.  Actually, we bought it a year ago, but we now have the title in hand, so it’s truly ours now.  If you’ve been reading this blog for a while, you know I was a fan of my Honda Civic.  But at 20 years old and with 225,000 miles on it, and with our second baby on the way, we had decided it might be time to replace it.  So last year, just before our second son was born, we bought a 2009 Mazda5.  We had been shopping on Craigslist for about six months prior to making the purchase.  We had our “car account” at ING that we had been funding for over a year, and we had about $5000 in it at the time that we decided to replace our car.  We had additional savings that were not earmarked for a car, and we debated whether or not to dig into that account to pay for a new vehicle.

I wrote out a pros and cons sheet.  I like doing things like that.

I talked to our credit union to find out what sort of interest rate we’d get on a loan.  Then I calculated the total interest we’d pay over the life of the loan, and the total interest we’d pay if we paid off the loan in one year instead of three.  (I just used a mortgage calculator that lets you see how extra payments impact the life of the loan).

We had initially been looking at vehicles that cost $5000 or less, in order to just use the money in our car fund and be done with it.  But the more we talked about it, the more we decided maybe we wanted something a bit newer that was still under warranty.  We wanted something with room for our kids and dog and whatever gear we needed to haul, but we also wanted something that was good on gas.  The Mazda5 jumped out at us as the perfect compromise between a car and a minivan.  Sliding doors (awesome), seating for six, and lots of cargo space in the back if you’re only using the middle row of seats.  Plus, I’ve averaged over 30 mpg (city/highway combined) every single time I’ve filled the tank in the year that we’ve had the car (I focus on gas mileage when I drive, so my numbers are always better than what a car is rated for.  I go about 68 on the interstate, and in town I avoid hard braking and try to plan ahead to allow myself to coast up to lights as much as possible, etc. )

Anyway, we paid $14,000 for our car.  It was two years old and had about 40,000 miles on it.  It’s under warranty until 60,000 miles.  We’ve put 7,000 miles on it in the past 14 months, so we should have another two years of warranty coverage at this rate (That’s all of our driving – we still have my husband’s 22-year-old car, but we’ve probably put less than 200 miles on it in the past year.  We could get rid of it, but it’s a cheap backup vehicle that costs very little to register and insure).

So back to paying for the car.  After much research and discussion, we decided to finance $10,000 of the purchase price.  We took $4000 from our car account for a down payment.  We saved the other thousand in that account to use for registration, insurance – which we upgraded to full coverage for the first time ever – and to have just in case other miscellaneous expenses came up.  Then we financed the other $10,000 through our credit union at 4.5% interest (better than the dealership could offer us on a used vehicle).

Our plan was to pay off the loan in 12 months.  It ended up taking us 14 months, although the last couple payments were quite small, and the interest charge the final month was about two dollars.  Over the course of the loan, we paid $227 in interest.  Back when we were considering financing the vehicle, I had calculated roughly $215 in interest charges if we paid off the loan in a year, so it came pretty close to our expectations.

Once we had decided that we wanted to buy a newer vehicle that cost more than what we had in our car account, we figured we had three options.  One was to keep funding the car account and wait until we had the money to pay the whole price outright.  Two was to raid our other savings account and pay for the car outright, which would have cleaned out most of the account.  It’s much more robust these days since we’ve changed our mortgage payoff strategy, but that wasn’t the case a year ago.  The third option was to finance part of the purchase and pay off the loan as quickly as possible.  Once we calculated that it would cost us just north of $200 to finance the money for a year, we decided that was worth it to us.  It allowed us to have a newer, more reliable, safer vehicle before our baby arrived, and the additional interest wasn’t a budget-busting amount.

Once the loan balance got down to the last couple thousand dollars, the total monthly interest charges were very low.  So the last few months, we prioritized our municipal bond fund over the car loan – which is why it took a couple extra months to pay off the balance.  But it’s paid off now, and we have the title in hand.  That feels good.  And the $227?  Totally worth it.  I gotta say, after eight years of driving my old Honda, the Mazda might as well be a Mercedes as far as I’m concerned.  I know that it’s safer for our family, and I like that too.  We’re able to fit two additional people in our car now too, which has been nice when we’ve had out-of-town visitors (like my in-laws) who arrived by plane.  And all winter long, every time I went to town for groceries, I brought home 15 2x4s in our Mazda.  They fit just perfectly down the middle between the seats.  I probably brought home 200 2x4s that way, and my husband was able to finish framing our basement a few months ago.  The car has been a good little work-horse.

Anyway, now we’re back to having only a mortgage on the debt side of the account balance.  I definitely like it better that way.  But I’m glad we got our car when we did, and I consider the interest payments well worth the benefit we’ve had from having the car over the past year.  I had always been opposed to the idea of financing any depreciating asset, but when I wrote out my pros/cons sheet on this one, I was convinced that this was the way to go.  Of course a big part of the strategy was to pay off the loan as quickly as possible, especially in the early months when the outstanding balance was highest (the first month, our interest payment was around $35).

We plan to keep this car for a very long time.  Given the fact that we had our 20-year-old Honda until it hit 225,000 miles, and how little we drive, I’d say we’ll still have the Mazda when our boys get to high school.  The Honda had 182,000 miles on it when we bought it, and we kept it for eight years.  Given that our Mazda was practically brand new (40,000 miles – I had never had a car with only five digits on the odometer!), I think it will serve us well for many years.

Have you ever financed a car?  Would you in the future?  If you had asked me that two years ago, I’d have said no on both counts.  But this ended up working out very well for us.  I doubt we’ll ever finance another car, given that we’re still contributing automatically to our car savings account and  are probably many years out from needing to buy a car again.  But this experience did make me consider loans in a slightly different light.  Rather than my usual “all debt is bad and I’m allergic to interest payments” attitude, our car-buying process made me think of the interest payments as the price we paid for having our car a year earlier than we would have if we had waited until we could pay for it outright.  To us, it was worth it.

Yesterday I cooked one of the soups that I had “crockpot ready” in the freezer.  It turned out fantastic!  It’s one of our favorite soups (the French lentil soup in the bottom left corner of this page), and none of us could tell the difference between the one I make fresh and the one I made by dumping a bag of frozen ingredients into the crock pot.  Definitely a winner! 

So this morning, I spent somewhere between an hour and a half and two hours (I had to help our son with his couch cushion fort in the middle of it, and change a diaper, so exact times are hard to come by) and made five double batches of it for the freezer.  I always double that soup recipe so that it fills up the whole crock pot.  That lasts us two full meals and part of another meal.  So today’s chopping and blanching session should give us at least 12 or 13 meals.  They’ll be perfect for busy mornings when I don’t have time to chop up all the ingredients for soup – all I have to do is dump a bag into the crock pot, add 12 cups of water, and let it cook all day.  Hard to beat that.

I blanched the carrots and potatoes before I added them to the soup bag, and they had the same taste and texture that they usually do when I cooked the soup.  Not sure if it would work if they went in the freezer raw, and I decided to go ahead and blanch the carrots and potatoes for today’s prep session too – it was worth the extra few minutes that it took.

In another kitchen adventure, yesterday I made my own veggie bullion! 

I got the idea from a reader (thanks Kay!) and decided it was worth trying.  I used this recipe.  The units are all in ounces, so I used our postage scale to weigh stuff before adding it to the food processor.  I didn’t have enough salt (9 ounces is a lot!) so I ended up using about half as much as the recipe calls for.  It’s still very salty and has enough salt in it to keep it from turning solid in the freezer.  So I was able to scoop it out into the bags of soup I was prepping this morning.  By my estimates (based on 1 tsp homemade bullion per cup of water to make broth), the batch of bullion I made yesterday is roughly equivalent to 10 boxes of the bullion cubes that I normally buy for $2.50 per box.  I don’t know how much my ingredients cost, but I would guess somewhere around $8 – $10 (all organic).  And of course the stuff I have in the freezer now doesn’t have yeast extract (MSG) in it.  When I made my soup bags today for the freezer, I replaced half the store-bought bullion with my homemade stuff.  We’ll see how it turns out.  For now, I’m quite excited about it.

Have a wonderful weekend!

Ever since we bought our first house in 2003, we’ve always paid extra on our mortgage.  Even in the early days of being self employed when we had barely any money, we always tried to put at least a little extra money towards the mortgage principal each month – even if it was only ten dollars.  When we bought our current house, we opted for a 15 year mortgage, and set a goal of paying it off in seven years.  So far, so good.  We’ve been here 2.5 years and have paid off a little more than five years on the loan.  Our current amortization table shows the house being paid off 9.75 years from now if we stop making additional payments and just pay the monthly bill as scheduled.

Our strategy with paying off the mortgage has always been pretty straightforward.  We just add whatever we can each month to the payment we make to our loan company, with instructions to apply the additional money to the principal balance.  That has always worked well, and in the last 2.5 years, it’s put us 33 months ahead on our mortgage.  Seeing the house become more and more ours instead of the bank’s definitely makes all of our frugal habits worth the effort.

But we’re changing our strategy a bit.  The goal is still to pay off the house within the next four or five years.  But instead of sending the extra payments directly to the mortgage company each month, we’re putting them into a municipal bond fund at Vanguard instead.  We’ve had the fund for nearly two years, and have always considered it an emergency fund.  Knock on wood, we’ve never needed to take any money out of it.  Starting this month, we increased our monthly automatic contribution to that fund to be roughly equal to what we had been paying in additional mortgage principal.  And we’ve scheduled our mortgage payment to be just the regular amount due with no additional principal payment.

Once the balance in the bond fund equals the outstanding balance on the mortgage, we can pay off the loan in one lump sum.  We’ll probably actually wait until we have a bit more in the bond fund, in order to still have an emergency fund in place when we pay off the loan.  But you get the idea.

The interest rate on our loan is 4.625% (and we take the standard deduction on our taxes, so we don’t get a tax break for our mortgage interest).  The bond fund is currently paying roughly 3.5% in dividends and had been very consistent over the two years we’ve had it (the money we earn in the account is exempt from federal taxes since it’s a municipal bond fund.  We do pay state taxes on most of it – except for the bonds that are issued in our state – but that doesn’t amount to much).  The one drawback to the bond fund is that it’s not FDIC insured, but we’re ok with that.  It’s diversified across municipalities all over the country, and we feel very comfortable with it.  As far as we’re concerned, the 1% difference in rates between the mortgage and the bond fund is more than justified by the fact that if we put the money into the bond fund, we can still access it in an emergency, even though it’s earmarked for paying off the mortgage.  Whereas if we just send it straight to the mortgage company, it can’t be used for anything else.

If everything continues to go great, there will be no (or very little) change in the eventual outcome.  We’ll pay slightly more in interest on our mortgage over the next few years, since the principal balance won’t be dropping as fast as it was when we were paying additional money each month.  But the dividends we’re earning in our bond fund will increase faster than they were in the past.  And a few years down the road, we’ll be able to just pay off the mortgage in one big chunk.

But what if everything doesn’t continue to go great?  What if our income drops significantly?  What if one of us gets sick or disabled? (we do have disability insurance and an HSA, but a little extra cushion can’t hurt).  We’ve been in the health insurance industry for nearly a decade, but there’s really no way to know what the industry will look like five years from now, between reform laws, elections, court decisions, etc.

Those what-if scenarios were the deciding factor for us.  We’ve proven to ourselves that we’re very disciplined when it comes to money.  The contributions to the bond fund are already set up to be automatically drafted each month, we we know we’re never going to just pull the money out to go on vacation or buy a boat.  We’ll still consider it off-limits, just as it would actually be if we had sent it to the mortgage company each month.  But if we were to truly end up between a rock and a hard place, we would be able to use the money for something else.  Like making mortgage payments each month if we were to be without an income, for example.

We’ll see how it goes.  Here’s hoping we don’t run into any of our what-if scenarios, and the balance in the bond fund eventually meets up with the principal balance on the mortgage.  But it will also be a good feeling to know that we’re better prepared to take on financial challenges if they were to happen.

If you’re paying off your mortgage faster than scheduled, are you doing it directly through the mortgage company, or are you stashing the extra payments in another account and waiting until you can make a lump sum payoff someday?

Several of our son’s friends have play kitchens, and for about the last year those have been the toys our little guy enjoys the most when we play at other kids’ houses.  In our own house, he uses all of my pots and pans and utensils and then pretends that his blocks are muffins, pancakes, salad, tea, smoothies, etc.  He loves to help me cook, and it’s a common theme when he’s playing too.

We’ve mostly skipped Christmas presents for the last several years.  My husband and I don’t care one way or the other, and even though this will be our fourth Christmas as parents, our son hasn’t been old enough to know what all the fuss is about.  We involved him last year in our trip to the grocery store to pick out food for the food bank, and he went with us when we took a food basket to a WWII veteran we’ve known for years.  But we’ve never gotten a Christmas gift for our son before.

This year, we decided that in addition to our food donations we’d also get our son a Christmas present.  And a play kitchen seemed the obvious choice, since he’s mentioned numerous times that he’d like one and he has so much fun playing with them when we visit his friends.

So I started searching on Craigslist.  I found several plastic kitchens, and a few really expensive wooden ones.  Then yesterday this charming little wooden kitchen was listed for $45:

Other than the pretty shade of pink, it was perfect.  So I brought it home and went about making it a little less princess-like.  I will admit that the little girl in me – who spent the first half of the 80s shunning the 63 non-pink crayons in the box – sighed a bit when the first stroke of white primer went on over the pink oven door.  (Early 80s?  Who am I kidding?  I painted my bedroom furniture this exact shade of pink when I was in high school). 

Anyway.  This is what the kitchen looks like now:

But wait, the fun is just beginning.  What do you need to go with a play kitchen?  Play food, of course.  I browsed around online and saw lots of cheap plastic versions, and lots of expensive wooden and fabric versions.  And then I figured I might as well try making my own.  I had lots of felt and embroidery floss in my craft supplies, and I sat down to experiment a bit last night after we got the boys to sleep.  I spent a little over an hour and this is what I have so far:

Cookies!

and eggs!

The baking dish and the little blue frying pan were thrift store finds.  After I picked up the kitchen, I spent $13 at the thrift store getting all sorts of kitchens stuff to go with it.  Couldn’t resist that cute little blue frying pan!

I’m so excited to make more felt food.  It’s all sorts of fun, and really doesn’t take much in the way of time or talent or money.  I have plans to make stuff to put together into a sandwich, veggies for a salad bowl, and a pizza.  The cookies and eggs only took about 15 minutes each to make, so I can sneak in at least one more little piece of food each night after our son’s in bed.  More pictures coming soon, I promise!

The only other Christmas present we’re doing this year (other than donations of food and money for charities) is my annual scrapbook for my mother in law, which is already finished.

Any of you going with second-hand and/or homemade Christmas presents this year?  I’d love to hear about your ideas.  And if any of you have experience with making stuff for a play kitchen, I’d especially love to hear from you!

Happy Thanksgiving!

For quite a while now, I’ve enjoyed The Minimalist Mom’s blog posts.  Her straightforward approach to keeping life simple and raising her son really resonates with me, and I often find myself nodding my head in agreement when I read her blog posts.  No birthday presents for a one- or two-year old?  Same here!  The first time we got a birthday present for our son was this year, for this third birthday.  He and my husband drove to a nearby town to pay $20 for a bike we found on Craigslist.  Then my husband spent the afternoon fixing up the bike and we let our son start riding it around that day – a few days before his actual birthday.  We try to make every day great rather than focus our energies on birthdays and holidays, and we’re also fully on board with the idea that very small children really don’t need much in the way of toys.

I didn’t come upon the idea of minimalism and having less stuff until about a year and a half ago.  But I’ve been frugal my whole life and that quality went a long way towards keeping our baby clutter to a minimum and sharply limiting the amount of money we spent on baby stuff.  Nearly everything we have for our boys is hand-me-downs from friends and stuff we got at thrift stores and on Craigslist.  Now that our baby is starting to outgrow stuff, we’re able to pass it on to other friends or list it for free on Craigslist without worrying about how much we spent on it – because we didn’t spend much.

We prefer to keep things very simple when it comes to our boys, and to life in general.  We know that we don’t need to spend much money or have new things in order to be happy.  We let our son pick out toys at Goodwill and then choose which of his current toys he wants to donate in order to keep the toy clutter from multiplying.  For our baby, things are even easier:  he wears simple clothes, hangs out near us all day, rides around in the sling whenever we go somewhere, and sleeps next to me at night.  He nurses whenever he’s hungry and is just starting to sample some of the food we eat at meal times (so far, he’s not impressed).  He needs almost nothing in terms of physical stuff.  We have a stash of cloth diapers, the hand-me-down clothes that his big brother wore, and a couple of slings.  He’s seven months old, and that’s pretty much all he needs so far.

Since I’m obviously convinced that simple is better and less is more when it comes to raising small children, I was thrilled when Rachel asked me to contribute a section to her new e-book, The Minimalist Mom’s Guide to Baby’s First Year.  I just finished reading the book, and it’s excellent.  For anyone who is planning to have children or already a new parent, this book is the antidote to the frenzied marketing that is directed at new and expectant parents.  It would also make a great gift for any new or expectant parent who is feeling stressed by the expenses and clutter that seem to go hand-in-hand with having a baby.

As an added bonus, Rachel is contributing $5 from each sale between now and November 12th to Care.  Care is raising money to build two new maternal health clinics in the Democratic Republic of Congo.  The time I spent as a Peace Corps Volunteer in Africa makes causes like this particularly close to my heart, and I’m grateful to Rachel for her commitment to helping with this worthy project.

I hope you enjoy The Minimalist Mom’s Guide to Baby’s First Year.  I hope it helps you slow down and enjoy your baby.  I hope it frees you from worrying about buying all the right stuff for your child.  I hope it reminds you that lying on the floor playing with your baby is far more important than scouring the internet looking for the best deals on baby leg warmers.  And I hope it inspires you to follow your own intuition about what your baby needs rather than looking to big box stores for answers.  Happy reading!

I’ve been blogging for five years now, but for some reason I’ve always procrastinated on the idea of setting up a Facebook page for Frugal Babe.  No more!  Frugal Babe now has a Facebook page, and I’m excited to share stuff with you on there.  I’m looking forward to getting to know my readers better via their Facebook pages too.

Hope November is off to a good start for all of you!

We had our first real freeze last night, so I have spent the last few days harvesting the remaining crops from our garden and preserving everything.  I thought I was almost finished on Saturday, but then on Sunday a friend told me about a field just down the road from our house where the huge local organic farm had put up a “help yourself” sign after the field got lightly frosted.  I guess they decided it wasn’t worth harvesting, even though there was still a ton of good produce out there.  I went on Sunday afternoon and filled four reusable shopping bags with tomatoes, peppers, and broccoli.  Then I went back on Monday with the boys (baby in the Moby Wrap, three-year-old helping me find veggies) and filled another four bags.  This is part of the haul:

I was up until midnight on Sunday blanching and freezing broccoli:

This was especially awesome because we didn’t grow any broccoli this year in our garden.  But now I have 17 quarts of perfect little broccoli florets in the freezer.  Did I mention that the farm is organic?!

I also ended up with about 12 quarts of roasted tomatoes and tons of frozen pepper chunks.  I’ve stopped keeping track, and I’m still freezing peppers since I can only do two baking sheets at a time.  I think I still have about 30 peppers in a bag on the counter waiting to be frozen or roasted, but all the rest of the gleaning haul is in the freezer.

I’ve had several readers who want to see pictures of our preserved harvest.  Here are the canned jars of tomato sauce and diced tomatoes:

Here’s the freezer:

And the door of the freezer:

The freezer door has one bottom shelf that didn’t fit in the picture – it’s got another seven quarts of roasted tomatoes on it.  The ziplock bags are all full of greens (chard and turnip), peppers, onions, and pumpkin.  The main part of the freezer also has some of our Costco stash – lots of frozen berries and cherries – but is mostly stuff from our garden.  I’ve lost track of how many quart bags of greens I have now, but I’m guessing it’s somewhere around 60 or 70.  We got our cold frame in place recently over the garden bed that still has lots of greens in it, so we’re hoping to extend the growing season for greens for another month or two, and then we’ll rely on the frozen greens for the coldest part of the winter.  The top two shelves in the freezer still have some room on them, but I’m hoping that they will be mostly filled by the end of the day today.  My plan is to finish chopping and freezing most of the peppers, and to harvest and freeze the rest of the chard that isn’t under the cold frame in the garden. 

In addition to all the canned/frozen stuff, we also have a few boxes of potatoes and onions that we dug out of the garden recently:

I only bought one bag of seed potatoes last spring.  But I had a bag of potatoes that I had forgotten about in the pantry and they were all wrinkled and covered in sprouts when I found them.  It was planting time, so I just chopped them up and stuck them in a garden bed.  Midway through the summer, I thought that our potato crop hadn’t amounted to anything, because all of the plants died by the end of July.  But then we dug into one of the beds (to plant something else) and the first shovel full of dirt had four potatoes in it.  We ended up with three beds full of perfect potatoes – not bad!

Whew!  I don’t know how many hours I’ve spent preserving food in the last few days, but I can say that I’m glad garden season is just about finished for another year.  We love it, but it’s a lot of work.  By early spring next year, I’ll be itching to get my hands in the dirt again.  But right now, I’m ready to just enjoy cooking with all the food we have stashed away for the winter.  I will miss plates full of freshly-sliced tomatoes just off the vine though…

In my post asking what you’d like to see me write about, two readers asked me to address the specifics of how my husband and I set up our home-based business, and I’ve also had numerous emails about this subject over the years.  So I’m going to lay out the basics of what we did, and what has worked for us.  This post is a bit long, but since I’ve had so many questions about this subject over the years, I want to add as many details as possible – both the things we did right, and the stuff I wouldn’t repeat.  I hope it helps!

**** EDIT:  I would add that just because this stuff worked for us, obviously it’s not a how-to manual and it won’t work for everybody or every business.  We worked hard, but we also had a lot of luck on our side.  This post is meant to highlight the steps we took, some of which might work for you if you’re thinking of starting your own business.  But please don’t feel like you have to do the same things we did or make the same decisions we did.  The world is a much different place than it was ten years ago, especially when it comes to online businesses. ****

1.  A disclaimer… We’re in the individual health insurance industry.  It has been great for us for nearly ten years.  But I wouldn’t recommend it right now to someone starting from scratch, simply because everything is so up in the air with health care reform.  The reform law that passed last year has significantly cut our commissions (and likely driven a lot of newer agents out of the industry, because it’s a lot easier to weather commission cuts if you have a large, established client base), and there are a lot of unanswered questions about how the industry will work as of 2014.  And of course, the whole law is headed for the Supreme Court, so it’s anybody’s guess how this will all shake out.  In a nutshell – insurance is great, but if you want to become self employed, I would steer clear of individual health insurance at least for the next few years.

2.  We eased our way in.  My husband quit his corporate job in early 2002 and started selling health insurance.  I kept my corporate job for another year and half so that we could live off of my income while he got things started.  At that point, I quit my job and joined him.  During the first year he was self employed, he made very little money, and it would have been particularly rough if we had both jumped into being self employed at the same time.

3.  We had no kids and very little in the way of financial obligations when we first became self-employed.  On the other hand, we also had no savings or assets to fall back on.  Our rent was about $700/month, we had no debts, and our living expenses basically amounted to food, gas, utilities, etc.  So it was relatively easy to make do on very little income.  It would have been nice to have a little bit of savings to cushion us, but we were very young and living paycheck to paycheck.  We bought our first house after my husband had been self-employed for about a year, and that bumped our housing costs up to about $1280/month.  Definitely a stretch.

4.  We used credit cards to get by.  I know this is a big DON’T when starting a business, and I wouldn’t recommend it.  But it worked for us.  By the time I had been working with my husband for about a year, we probably had $35,000 in debts.  This was partially due to making barely enough money to pay the mortgage and using credit cards for stuff like groceries, although most of the debt was business-related.  We spent a lot of money on marketing:  pay-per-click with Google, multimedia business cards, buying leads from an agency we worked with in the first couple years… it all added up, really fast.

5.  We played the credit card game, transferring balances from one card to another in order to get zero-interest deals.  It actually worked really well for us, but that’s because I tend to be extremely detail-oriented with stuff like that, and I always made sure that I read the fine print and got things paid off before the promotional periods expired.  Again, using personal credit cards to start a business is probably not the best idea.

6.  We incorporated.  This was an excellent move, but one that we didn’t make until 2006.  Looking back, we should have done it sooner.  Once we incorporated, we were able to completely separate our business and personal finances, and become W-2 employees of our business.  Much more official than the self-employed status we had for the previous few years.  By that point, we had nearly paid off our various debts, but once we incorporated, we had the option to get a business loan if we needed it, and we did get a business credit card.  That would probably have been a smarter way to go about financing the start-up costs of our business, but we didn’t know what incorporation entailed and didn’t become educated about the benefits until we had been self employed for a few years.  We went through an online company that specialized in incorporation paperwork, and I think it cost us about $500.  We’re an S-corp, which has worked perfectly for us (there are several options for incorporation – do your research from both a business and tax perspective before you settle on an option).

7.  We lived poor.  I think “fake it till you make it” is terrible advice.  I know some people will disagree, and I know that there are a few professions where it might actually be good advice.  But for most of us, clothes from a thrift store (which look just like clothes from the mall!) and a used car or bike will work just fine.  So does a small house or apartment.  Even with our frugal lifestyle, it took us until 2007 to pay off the debts we incurred to start our business (most of that money was spent in 2003 and 2004).  If we had financed new cars, eaten at fancy restaurants, bought new clothes, etc., it would have taken much longer.

8. We transitioned to working on-line back in 2003.  This was probably the best move we made in setting up our business.  Over the course of about two years, we went from having a mostly car-based business to having a mostly home-based business.  These days, we literally never leave the house for work at all.  We can “meet” with far more clients  in a day than we ever could have when we were driving all over the state.  We can work from anywhere as long as we have high speed internet and a phone.  The best part about working on-line is that we’re both home all day with our sons.  My husband is in his office (either in the basement or out in the office we built in our backyard) all day, but he can take breaks to come and hang out with us, and I get to be with our boys all day, taking breaks to fit in business-related work when I can.  (I only work about 15 hours a week for our business these days).

9.  My husband spent hundreds of hours in the early years of our business teaching himself the art of search engine optimization in the evenings, after a full day of work.  This has paid off tremendously for us, but there were many late nights in front of the computer.  If you’re going to be self-employed, you’re going to have to put a lot of time or money (or both!) into marketing.  Being self-employed does not mean that you work whenever you feel like it.  Especially early on, it pretty much means that you work all the time.  But if you’re ok with that, the amazing thing about the world we live in today is that you can learn – online, from home – just about anything you put your mind to.

10.  We didn’t seek out glamorous, cool jobs.  There is nothing exciting about health insurance.  Actually, we think it’s pretty interesting, and all the legislation surrounding it for the last few years has been fascinating to us.  But when you’re at a party and tell someone you’re a health insurance broker, they tend to say “oh, that’s cool” and then change the subject.  We are not astronauts.  But that’s fine with us.  My husband has always wanted to have his own business, and he loves the challenges that come with being his own boss.  But in general, we do not find our primary fulfillment from our career.  We look at our business as a way to earn money, and we seek fulfillment from the things we love (gardening, raising our boys, being outdoors, spending time with family, learning new things, etc.).  I know that some people are very successful at making something they love doing into a career.  But having the mindset that work has to be something you love can also be a big hurdle to clear if you’re looking at setting up your own business.  Just food for thought.  Whatever you do for a living, I would recommend doing it to the best of your ability.  Don’t be a slacker.  But don’t feel like you’re selling yourself short if you’re earning an honest living doing something that is “just a job”.

11.  We’re honest.  This is huge.  Working for yourself means that nobody is looking over your shoulder on a daily basis, making sure you’re being ethical and honest.  Some self-employed people get themselves into trouble because they start to feel like they can do whatever they want.  They tell customers what they want to hear (or what needs to be said to make a sale, whether it’s true or not), they stretch the truth with the IRS, they fudge compliance paperwork… there are all sorts of traps that you can fall into if you let yourself start to deviate from the path of honest-and-ethical-all-the-time.  In the insurance industry, there are some carriers that pay higher commissions than others, and there are always carriers that are running various bonus programs for agents who sell a high volume of their products.  But our philosophy is that the best strategy is to sell each client the product that works best for that client, and that the money will take care of itself.  We might not have always qualified for the best bonuses or the highest commissions, but we have lots of clients who have been with us for nearly a decade.  Our BBB and insurance license records are complaint-free, and we rest easy at night knowing that all of our income has been reported to the IRS (yes, even the income that the payers didn’t report), all of our records are in order, and all of our clients have received honest advice.

12.  We paid ourselves first.  For about a year in 2003/04, we didn’t contribute any money to our retirement plans.  That was our roughest year in terms of income, and we were barely able to pay our mortgage.  But by the summer of 2004, we decided that we had to make retirement savings a priority again, even if it meant tightening our already-tight belts.  So we started small, putting $100/month into each of our IRAs.  As we earned more money, we increased the amounts we were contributing to retirement.  We’ve kept our day-to-day living expenses about the same for the last five years or so (not as frugal as we were in 2003, but nothing extravagant either), which has allowed us to set up a SEP-IRA through our business, max out our HSA and IRAs each year, and also create an emergency fund.  If we’re able to keep on earning a good living from our current business indefinitely, that’s great – we’ll just retire a bit earlier.  But if not, it will be nice to have a bit of a cushion.  Especially now that we have kids.

13.  We stopped taking advance commissions very early on.  The first couple of years that we were “self-employed” we were actually contract workers for a large insurance brokerage.  We were self-employed, and only got paid if we made a sale, but many agencies will pay advance commissions to agents.  Basically, when you make a sale, they pay you ten months of commissions up front.  That makes for some nice paychecks, but it also means you’re in debt to the agency.  If the client ends up cancelling, you have to pay the money back.  If the client keeps the policy, the debt to the agency will be repaid in 10 months, but it becomes a never-ending cycle.  Most of the other agents we talked to had quite a bit of advance commission debt, even though they were making big paychecks every month.  We decided we’d rather live off of what we were actually earning, and switched to as-earned commissions.  That was painful at first, but we slept easier at night.  And it made it much easier to transition to setting up our own agency, since we were no longer relying on a larger agency to pay us advance commissions.

14.  We worked hard to build solid relationships with the top insurance carriers.  We avoided cut-rate carriers, even if they were offering sweet commissions and extra bonuses.  We wanted to make sure that the products we were offering our clients were from solid, reputable carriers rather than some new carrier that had just entered the market and was offering trips to Hawaii for brokers who sold lots of their policies.

I hope this is helpful for those of you who are interested in setting up your own business.  A lot of this stuff will apply to many industries and lines of work – not just insurance.  The internet has given us more opportunities than ever to be our own bosses and work from home.  Of course, it’s also created lots of scams and traps for the unwary.  If something sounds too good to be true ($8000/month, working from home, no experience necessary, start tomorrow!), it probably is.  Establishing a successful internet-based business isn’t easy, but if you make it work, the rewards are huge.

Over the weekend, we went to an awesome vegetarian restaurant that got two thumbs up from my omnivore husband and son.  They shared a bean burger that they both loved, so I’m on a mission to recreate it at home.  The bun was obviously freshly-made at the restaurant, so yesterday I decided to try my hand at making burger buns from scratch.  I found this recipe, and I highly recommend it.  As I was kneading bread dough, with my three-year-old helping and the baby on my back in a sling, it occurred to me that if my 18 year-old self could have flashed forward 15 years to see this ultra domestic scene, she probably would have thought that this baker lady must be an imposter.

Anyway, here are the finished buns:

My husband walked in while they were cooling on the counter, and said “wow, those are great-looking buns.  Nice work!”  So of course, I replied “Thanks sweetie – I’ve been doing Bodyrock for 4 months now.  Glad it’s paying off!”  (all joking aside, I freakin’ love that site – go check it out if you haven’t already).

I reduced the honey in the recipe to 1/3 cup (I pretty much always cut down on the amount of sugar called for in recipes, and they almost always turn out just fine anyway), and sprinkled hemp seeds over the top of the buns before I baked them (that was what I had on hand).  I used 4 cups of whole wheat pastry flour and two cups of white flour, but they’re still quite light – I think I could bump the whole wheat up to five cups next time.  I ended up with 16 buns (four on another tray), so I have a large bag full of them in the freezer now for future meals.

Now I’m looking for awesome bean burger recipes.  I’ve tried lots of them, and they’re usually quite tasty, but they they tend to fall apart.  So if you have a recipe for a good bean burger that doesn’t fall apart when you’re eating it (or cooking it!), please let me know!

I’ve been having more fun with my spiralizer too.  These are curly sweet potato fries (all that, from one spud!) ready to go in the oven:

And a great salad made from the garden harvest yesterday (a zuke, a cuke, a bell pepper, and a few carrots):

I’ve been freezing swiss chard and so far I have 11 quart bags in the freezer.  It’s a bit of a process, since I have to blanch the chard before I can freeze it, but I’ve been doing a few bags a day and I’m making progress.  I’ve also diced and frozen several bell peppers (love them – just dice and freeze on a cookie sheet, then toss in a bag).  Tomato canning season will be here before I know it, so I figured I better get a head start on the other stuff while I have time.  I’m excited to freeze lots of greens this year.  We have tons of them right now, and it will be nice to not have to buy as many bunches of greens during the winter for our green smoothies.  I prefer fresh greens over frozen ones, but the “fresh” ones in the stores in January have been trucked here from somewhere else anyway, so frozen greens that were harvested from our own yard the previous summer are probably just as good nutrition-wise (even with some of the goodness blanched out of them).

Hope you’re all having a great week!

Our zucchini patch is doing what zucchini patches do… we have lots of zucchini.  And our summer squash patch is producing even more.  I’ve been offering squash to friends lately, and coming up with all sorts of ways to use squash in our meals.  We also have lots of wonderful cucumbers this year, which I’m very excited about.  Last year, I accidentally planted pickling cucumbers, so this year I remembered to get seeds for slicers, and they’re awesome!

In my quest for ways to use squash and zucchini, I remembered that I’ve been wanting a spiralizer for a few years now, but I kept putting it off.  So last month, I finally ordered one, and I’m so glad I did!  It might not get used as much as my VitaMix, but it sure is fun to use.  It makes noodles out of whatever veggie I put in it, and I can also make little swirly chips out of things like cukes and zucchini, or curly fries from potatoes and sweet potatoes (just toss them in the oven for a while for awesome baked curly fries).

Here’s a cucumber being made into little chips:

And a zucchini turning into long spaghetti style noodles:

Yesterday I used the spiralizer to make our lunch:  zucchini, carrots and cucumbers, and then I chopped a red bell pepper and added it to the mix.  From there, I made an Asian sauce that was inspired by this recipe but modified to include ingredients I had on hand.

Our son loves watching noodles come out of the spiralizer, and while we were eating our spiralized lunch yesterday, my husband commented that I had a winner with that little gadget.  Now I just wonder why I waited so long to get one.